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Redding, near Mount Shasta, and Victorville, in the Mojave Desert, have little in common but an unusual statistic: In each city, a hospital has reported alarming rates of a Third World nutritional disorder among its Medicare patients.

But in 2009, Shasta Regional Medical Center in Redding reported that 16.1percent of its Medicare patients 65 and older suffered from kwashiorkor, according to a California Watch analysis of state health data. That's 70 times the state average of 0.2percent. At Desert Valley Hospital in Victorville, the kwashiorkor rate among Medicare patients also was high: 9.1percent, about 39 times the state average.

Both hospitals are owned by Prime Healthcare Services, a Southern California chain that specializes in turning around financially troubled hospitals. The chain is the subject of state and federal investigations into accusations of overbilling the federal Medicare system by millions of dollars in connection with a reported outbreak of septicemia infections. Prime has four hospitals in Orange County.

In interviews and e-mails, Prime officials said that their billing practices are legal and proper, and that the kwashiorkor reports are accurate, a reflection of how seriously the company takes the problem of malnutrition among the elderly.

As with septicemia, a diagnosis of kwashiorkor on a Medicare patient's bill can entitle a hospital to a bonus from the government worth thousands of dollars, according to federal records.

Four experts in malnutrition and Medicare issues told California Watch that they doubted there was an actual cluster of kwashiorkor cases at the hospitals. An investigation of individual patients' records could clarify what is going on, they said. Medicare officials wouldn't say whether they have reviewed the chain's malnutrition billing records.

The reported surge in kwashiorkor among senior citizens surfaced in California Watch's computer analysis of 2009 Medicare billing data, the most recent available. The analysis found high rates of several forms of malnutrition at Prime hospitals – diagnoses that could open the door to larger Medicare payments.

Among the findings:

In 2009, Prime reported that 25 percent of its Medicare patients were malnourished, another medical complication that can entitle a hospital to a reimbursement bonus from the government. The state average for hospitalized seniors was 7.5 percent.

Of the 10 California hospitals that reported the highest malnutrition rates among Medicare patients, eight – including the top four – are owned by Prime.

The hospital with the highest malnutrition rate for seniors in California was Prime's Huntington Beach Hospital, which serves a city with one of the lowest poverty rates in the U.S. – 5.6 percent – and average income of more than $100,000 per family. The hospital said 39 percent of its Medicare patients were malnourished.

Statewide, only 1.3 percent of Medicare patients were diagnosed with the types of severe malnutrition that pay the biggest treatment bonuses – nutritional wasting and severe protein calorie malnutrition, in addition to kwashiorkor. Prime's rate for these conditions was 10.1percent.

In all, the Prime chain treated 3.6 percent of Medicare patients in California, records show. But 12 percent of the state's malnutrition cases – and 36 percent of all kwashiorkor cases – were reported at Prime hospitals.

As California Watch reported in October, authorities are investigating Prime hospitals to determine whether a reported cluster of septicemia infections in 2008 reflects a health care problem or a fraudulent billing practice called upcoding. That's an illegal practice by which hospitals overstate patients' diagnoses on billing records to obtain bonus payments that can amount to millions of dollars.

Like malnutrition and kwashiorkor, septicemia is among the medical complications that qualify for enhanced Medicare payments, according to federal records.

In e-mails, a company executive said Ontario-based Prime provides top-flight health care and deals honestly with Medicare.

“Prime Healthcare hospitals cannot, have not and will not engage in ‘upcoding' or Medicare fraud,” wrote Ajith Kumar, director of reimbursement management.

Citing internal data, he said Prime obtained enhanced payment from Medicare in only 3.6 percent of its malnutrition cases. At other times, the company put the rate at 3.1percent. The billing data available to the public doesn't flag the cases that received enhanced Medicare payments.

Kumar didn't respond to questions about the chain's overall malnutrition rate. But he said that Prime is a leader in early diagnosis and treatment of malnutrition and suggested that other hospitals aren't as diligent. The disparity in malnutrition rates “means there are patients going undiagnosed and untreated” at other hospitals, he said in an interview.

Kumar acknowledged that kwashiorkor typically is a Third World disorder. But he said Prime has followed accepted guidelines in identifying patients whose blood tests point to the disorder.

In e-mails, Kumar also complained that Prime was the victim of a “campaign of misinformation and extortion” engineered by the Service Employees International Union, which represents many Prime workers and has clashed with the company over pay and benefits.

Kumar said the septicemia investigations were launched last year because the union had provided regulators and lawmakers with what he called a “faulty and misleading analysis” of Prime's Medicare billings. Now, he charged, the union was trying to trump up another Medicare fraud probe, this time by complaining that the chain's malnutrition claims were out of line.

Kwashiorkor reports puzzle experts

The union has provided authorities with a private statistical study of Medicare records that showed high malnutrition and kwashiorkor rates at Prime hospitals, a union spokesman said. California Watch obtained health data from the Office of Statewide Health Planning and Development and relied on its own statistical analysis for this report.

Medicare, the system of government health care for seniors, pays treatment bonuses under certain circumstances because caring for patients with multiple health problems is more expensive. A report by the federal Centers for Medicare & Medicaid Services gives an example of how the system works.

In 2008, hospitals received about $5,300 on average from Medicare for treating a stroke patient, the report says. But if the patient also was diagnosed with malnutrition or any of the hundreds of other ailments that Medicare classifies as a medical complication, the payout was about $6,100 – 15 percent more.

A bigger bonus is paid if a stroke patient is also suffering from kwashiorkor or other ailments that Medicare classifies as major complications. In that event, a hospital received, on average, about $8,000 – 50 percent more.

Last year, Prime reported treating more than 6,800 malnourished seniors, records show. More than 2,700 were diagnosed with severe forms of malnutrition, including kwashiorkor.

Kwashiorkor itself is a childhood protein deficiency often associated with “the premature abandonment of breast-feeding,” the Merck Manual medical dictionary says. It's noted in regions of the developing world where staple foods are low in protein. News coverage of famine in Africa often features images of young kwashiorkor victims with the distended bellies that are a chief symptom of the disease. Other symptoms include swelling of the feet, loss of teeth and hair, and liver problems.

Directors of elder-care ombudsman programs in Shasta and San Bernardino counties said they were unaware of kwashiorkor in Redding and Victorville. Several experts said they were puzzled by the report of kwashiorkor among seniors.

“Traditional kwashiorkor is reserved for children in Third World countries that don't get enough protein in their diet,” said Dr. Matthew Butteri, a professor at UC Irvine's medical school and an expert in geriatric medicine.

Dr. David Reuben, chief of the geriatrics division at the David Geffen School of Medicine at UCLA, said he doubted that physicians were diagnosing kwashiorkor among seniors. Rather, he said it was likely that hospital personnel who translate doctors' notes into billing codes were making the interpretation.

“What's going on in the coding room there may require a deeper look,” Reuben said.

Other experts took issue with Prime's overall malnutrition rates.

Shannon Brownlee, acting director of the New America Foundation's Health Policy Program in Washington, D.C., questioned whether the surge of malnutrition reports at Prime was the result of “a clinical decision or a business decision.”

She added, “When you see such a big spike, you have to wonder what's really going on.”

Prime hospitals exceed state,

regional averages

California Watch's analysis focused on Medicare patients age 65 and older at general hospitals that treated more than 500 patients in 2009. Convalescent hospitals were excluded, as were hospitals in the Kaiser Permanente managed-care chain because of differences in billing practices. In all, 254 California hospitals were included.

The analysis indicated that Prime hospitals had higher rates for malnutrition among seniors than other hospitals nearby.

In Orange County, the malnutrition rate among seniors averaged 5.7 percent at the 14 hospitals not affiliated with the Prime chain.

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